A down day ahead for the Aussie market after a surprise sell off on Wall Street, a fall in the US dollar and a small drop in iron ore prices left the share price futures contract down 40 points at the close this morning.
Thanks to weak US durable goods orders, Wall Street fell sharply, with the tech heavy Nasdaq suffering its biggest one day drop in 11 months.
US durable goods orders unexpectedly fell 1.4% in February, against forecasts of a 0.2%, and January’s 2.8% was cut to just 2%.
Normally that news would have been seen as bullish for markets as it would have been another bit of data showing the pace of US economic activity is slowing.
That would seen a big rally in equities in particular (or rather has in the past month). But this time around there was a big sell off in the US.
That will see markets in Asia start weaker, the Aussie dollar is well above 78 US cents, gold is higher as is oil.
The Dow dropped 1.6% or a huge 292 points to 17,719; the S&P 500 fell 1.5% to 2,061 by end of day in New York and the Nasdaq slumped 2.4% to 4,877 points, dragged lower by lower prices for companies such as IBM, Intel and Microsoft.
Not even the $US40 billion takeover of Kraft by the Warren Buffett backed HJ Heinz could spark a bull run on Wall Street in possible takeover targets in the food and associated sectors. Kraft shares surged 35% overnight in New York, but it was a lonely rise.
It was a flat start to the day which ended up being a down day all round.
Iron ore eased to $US55.81 from $US55.86 and with the ripples still being felt from Fortescue chair, Andrew Forrest’s mistimed call for a production cap, the prices of iron ore miners’ shares will come under pressure.
Local investors though will be hoping for another strong day by the big four banks which yesterday ignored warnings from the Reserve Bank about the sustainability of the current surge in home prices, especially in Sydney and Melbourne.
ANZ and Westpac shares ended at all time highs yesterday on the ASX. Westpac shares rose 0.8% to $39.89 and ANZ gained 0.8% to $37.19.
Shares in the Commonwealth Bank added 0.8% to $95.86 and National Australia Bank shares rose 0.9% to $39.30.
The weaker dollar helped gold and oil rise on the day, but copper fell 0.4% in London from a 10-week high, to end around $US6,109 a tonne.
In New York, Comex copper eased 1.4% to just under $US2.79 a pound.
Gold added as much as $7 to hit a near three-week high of US$1,199 an ounce before easing to end just over $US1,195 an ounce.
Oil rose, then fell after US crude inventories climbed more than 8 million barrels to a new record of over 466 million barrels. It rebounded later in the session as the dollar weakened.
US crude futures rose 3.2% to $US49.04 a barrel, while in London Brent added 2.2% to end around $US56.24 a barrel.
